Basics Of Engineering Economy
2nd Edition
ISBN: 9780073376356
Author: Leland Blank, Anthony Tarquin
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 3, Problem 2P
To determine
Classification of the nominal interest rate and effective interest rate.
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Students have asked these similar questions
Calculate the effective rate corresponding to each of the following rates:(a) 9% compounded semi-annually(b) 9% compounded quarterly(c) 9% compounded bi-monthly(d) 9% compounded monthly(e) 9% compounded continuously
Calculate the effective annual interest rate for 15% correspondingto each of the following:(d) compounded monthly(e) compounded weekly(f) compounded daily(g) Compounded continuously
A problem on the midterm exam asked you to calculate the monthly payment on a $15,000
car loan at an interest rate of 9% compounded monthly to be repaid over 60 months, where
9% is the nominal annual interest rate. Some students incorrectly used 9% as the monthly
interest rate. A monthly interest rate of 9% is equivalent to what effective annual interest
rate?
(a) Effective annual interest rate = 9%
(b) Effective annual interest rate = 9% per month x 12 months per year = 108%
(c) Effective annual interest rate = 9% per month ÷ 12 months per year
0.75%
(d) Effective annual interest rate = (1+ effective monthly rate)12 – 1 = (1.09)12 –
1 = 181%
Chapter 3 Solutions
Basics Of Engineering Economy
Ch. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Convert an interest rate of 1.5% per month into a...Ch. 3 - Prob. 7PCh. 3 - Prob. 8PCh. 3 - Prob. 9PCh. 3 - Prob. 10P
Ch. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Prob. 23PCh. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - Prob. 29PCh. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - Prob. 35PCh. 3 - Prob. 36PCh. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39PCh. 3 - Prob. 40PCh. 3 - Prob. 41PCh. 3 - Prob. 42PCh. 3 - Erbitux is a colorectal cancer treatment drug that...Ch. 3 - Prob. 44PCh. 3 - Prob. 45PCh. 3 - Prob. 46PCh. 3 - Prob. 47PCh. 3 - Prob. 48PCh. 3 - Prob. 49PCh. 3 - Prob. 50PCh. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - Prob. 53PCh. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Prob. 56PCh. 3 - Prob. 57PCh. 3 - Prob. 58PCh. 3 - The initial cost of a pulverized coal cyclone...Ch. 3 - Prob. 60PCh. 3 - Prob. 61PCh. 3 - Prob. 62PCh. 3 - Prob. 63PCh. 3 - Prob. 64PCh. 3 - Prob. 65PCh. 3 - Prob. 66PCh. 3 - Prob. 67PCh. 3 - Prob. 68APQCh. 3 - Prob. 69APQCh. 3 - Prob. 70APQCh. 3 - Prob. 71APQCh. 3 - Prob. 72APQCh. 3 - Prob. 73APQCh. 3 - Prob. 74APQCh. 3 - Prob. 75APQCh. 3 - Prob. 76APQ
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- At what rate of interest, compounded annually will an investment triple itself in 8 years?arrow_forwardDetermine the present equivalent value of $400 paid over a period of 7 years in each of this situations: (a) The interest rate is 12% compounded annually (b) The interest rate is 12% compounded quarterly (c) The interest rate is 12% compounded continuouslyarrow_forwardHow much money would you need to deposit today at 9% annual interest compounded monthly to have $12000 in the account after 6 years? A) $7,007 B) $20,550 $20,125 D) $7,155arrow_forward
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